Blackstone signs agreement to buy out Piramal Glass for $1 billion

Blackstone has signed an agreement to buy out Piramal Glass for $1 billion (around Rs. R7,500 crore). Blackstone’s buyout of Piramal Glass follows the PE firm’s 23 per cent stake sale in another packaging firm Essel Propack earlier this year.

The US-based private equity giant will make an upfront payment of $850 million and take over the ownership and management of Piramal Glass. The remaining $150 million will be paid after Piramal Glass achieves certain business milestones.

Piramal Glass is a part of the $10 billion Piramal Group and is a manufacturer of specialised glass packaging solutions for cosmetics, perfumery, speciality food, beverages and pharma industries. The company has business across 65 countries.

“The current management team led by Vijay Shah (CEO & President, Piramal Glass) is terrific. Blackstone will support the team with various in-house and industry experts like Uwe Roehrhoff and Harish Manwani of Unilever which has been a customer of Piramal Glass for over two decades," said one of the people mentioned above.

Blackstone is a major asset manager in India, having invested around $16 billion (excluding the Piramal Glass deal) till date.

With the latest deal, Blackstone will gain from Piramal Glass’ large clientele. Piramal Glass is a major supplier to companies including Coty, L'Oreal, Diageo, Pernod Ricard and Sanofi.

In 2019-20, Blackstone private equity invested $2.5 billion in India while executing India’s largest buyout in financial services – Aadhar Housing Finance for $470 million.

At present, Blackstone is in active discussions to buy out the asset management business of L&T Mutual Fund. If the talks fructify, Blackstone will be able to exhaust the entire corpus of its first Asia fund.

Piramal Glass is one of the four players globally to have type 1 pharma glass capabilities that are used for complex products like liquid injectable drugs, which saw a surge in demand during the Coronavirus pandemic.

In the export markets, Piramal is number one globally in manufacturing and supplying nail polish glass (33% volume share) and is the number one in the US in specialty spirits bottles.

The global glass market targeted by Piramal Glass is estimated at $10 billion, growing at CAGR of 3%.

Glass manufacturing facilities are increasingly being shifted from high cost locations in Europe and the US to emerging markets such as India. Also, consumers are replacing plastic containers with recyclable glass bottles.

During fiscal 2020, Piramal Glass recorded a revenue of $293 million. Between FY2017 and FY2020, the company’s revenue grew at a CAGR of 5.3%, while EBITDA increased at a CAGR of 9.7%.

In the wake of the pandemic, while the cosmetics and perfumery sector took a hit on revenues, a visible growth in demand has been seen in the pharmaceutical industry which augurs well for the glass industry.